According to Born essential to the arbitral process is the freedom of parties, and arbitrators, to proceed with their chosen dispute resolution mechanism to a final award, which only then may be subject to judicial review.225 The emphasis in Europe on e.g.
procedural fairness and the principle of mutual trust is sometimes mocked in less controlled states such as the United States that promote an effective arbitration system for businesspersons.
As a conclusion of the hypotethical part above, the conclusion is that the Court and the EU legislators clearly have promoted general EU principles, such as the principle of adequate legal protection, before efficient procedural tactics supporting arbitration, such as anti-suit injunctions. However, the addition of the recital (12) also improved the protection of arbitral proceedings from abusive torpedo actions that have a harmful effect on arbitration proceedings.
Recital (12) allows for the courts of the seat of arbitration to rule on the validity of an arbitration agreement, even if the issue has already been raised before another Member State court. Furthermore, it provides that, if the foreign court reaches a decision on this matter, it has no binding effect on other Member State courts, which are therefore free to give their own ruling. The beneficial effect of these clarifications is that while parallel court proceedings may still be issued in foreign courts, such proceedings will not prevent arbitral proceedings from commencing or continuing with support from the
224 For more on the transparency challenge in the EU, see Tiili, V. Transparency – An Everlasting Challenge in Cardonnel, in Rosas & Wahl 2012, p. 473-485.
225 Born 2009, p. 1033.
courts of the seat of arbitration.226 In order to determine whether an anti-suit injunctions is justified or not, one would have to look into every case to see whether the lawyers are using it as a tool rather than something that has merit in the particular case. Lew for instance states that past cases reviewed to see how most arbitrators react to anti-suit injunctions show that it is clear that the injunctions were used as a device to stop or delay the arbitration process, and thus crippling the arbitration process.227
Knowing that the Member State courts now are able to rule in a case with the support of the Regulation and that they cannot lose competence because of fired torpedo actions, it will lead to an enhanced level of trust and improved judicial cooperation. However, the revision still shows some weaknesses that need to be addressed in the future in order to clarify these issues. While the Commission is setting up rules with the Member States and the execution of EU policies in mind, it must not be forgotten that these very states are members of other conventions and treaties as well. The ratification of a treaty or convention brings obligations that the members need to fulfil. Setting up rules that contravene the obligations under such conventions puts the Member States in the uncomfortable position to decide whether to follow the affected convention or whether to adhere to EU rules.
226 Ibid.
227 Lew, Julian D. M. Anti-Suit Injunctions Issued by National Courts. To Prevent Arbitration Proceedings, in Gaillard 2005, p. 27.
6 WHERE ARE WE HEADING? – SUMMARY AND CONCLUSIVE ARGUMENTS
‘The text of a regulation might seem clear enough but capable of a surprising result if interpreted literally.’
Ronald Dworkin228
Complex cases, which raise several intertwined questions either as a matter of claim or as defence where some of the issues could fall outside the scope of the Regulation, are undisputably difficult. The case law lacks real consistency and the problems are particularly intricate. The issues mainly relates to ancillary matters, indirectly raised claims, preliminary issues or preliminary proceedings, defences, incidental questions and provisional measures.229
Based on the information presented above we have now seen that the arbitration exception in the Regulation, though explicit, was in practice somewhat watered out by the Court that interpreted the arbitration exclusion narrowly and expanded the scope of Regulation (EC) No 44/2001 to comprise matters ancillary to arbitration, widening the opportunity for parallel proceedings, leading to extended disputes and prohibiting the use of anti-suit injunctions against other Member States’ court proceedings in breach of an agreement to arbitrate. The cases seem to indicate that the principal subject matter of the dispute is an excluded matter, for instance arbitration, and then the entire dispute is excluded from the scope of the Regulation, including any incidental or preliminary matter that would otherwise be included. Provisional measures in support of civil and commercial claims that would otherwise be excluded, under Article 1(2)(d) are within the ambit of the Regulation.
228 Dworkin 2006, p. 6.
229 Magnus & Mankowski 2007, p. 66.
If the main subject matter of the proceedings is not an excluded matter, it appears that the proceedings are within the scope of the Regulation. This is so despite the possibility of incidental, preliminary or ancillary matters falling outside the scope of the Regulation.230 This proposition includes any defences raised. Proceedings, which do not directly derive from an excluded matter, are included within the scope of the Regulation.231 Given that the Regulation allows declaratory proceedings, a well-advised litigant may take advantage of local law to fram the issues in the proceedings to fall within or without the Regulation to its benefit.232
In particular, in West Tankers, the Court referred to the general rule that apart from a few exceptions the Regulation does not empower a court of one Member State to rule on jurisdiction of a court of another Member State. It also found that anti-suit injunctions run counter to the principle of mutual trust between the Member States if they hinder the court of another Member State in the exercise of the powers conferred on it by the Regulation, namely ‘to decide, on the basis of the rules defining the material scope of the Regulation, including Art. 1(2)(d), whether the Regulation is applicable’. Broadly speaking, this means that according to the Court, court proceedings related to arbitration fall within the scope of the Regulation and thus outside the arbitration exception. Consequently, issuing an anti-suit injunction to prevent those proceedings would be inconsistent with the Regulation, as this would prevent the court from exercising the power to rule on its own jurisdiction. This in practice could frustrate the arbitration process severely, especially in cases where a party initiates proceedings in a Member State characterised by a slow and/or complicated judicial system. In addition, such court proceedings parallel to the arbitral proceedings could ultimately lead to two conflicting decisions on the same substance.
The revised Regulation (EU) No 1215/2012 included an attempt to clarify the confusing legal situation by adding a recital to the preamble describing the meaning and use of Article 1(2)(d). The recital however, trying to include all the different situations that have been discussed based on the Court's preliminary rulings affecting arbitration in the
230 Jenard report, p. 10.
231 Ibid, p. 12.
232 Magnus & Mankowski 2007, p. 66.
EU, is also confusing in that it seemingly contradicts itself in stating both that anti-suit injunctions are prohibited and that courts do have the right to examine their own jurisdiction (even though the principal goal is to refer the parties to arbitration if an arbitration agreement exists). This may not really abolish the use of malicious anti-suit injunctions in reality, since they are still a possibility in practice.
The question is whether starting legal proceedings in a national court, knowing the consequences it causes (and potentially knowing that the arbitration agreement could be contested in a court), constitutes an illegal procedural tactic when used maliciously, and does it in that case have the same legal definition as in a case where one of the parties genuinely questions the arbitration agreement and needs the protection of possible court proceedings examining the agreement in front of a national court.
Essentially, the matter is about giving different legal definitions to the same act. The legislator has probably considered this, but has still concluded that the principle of mutual trust has a stronger foothold than protecting party confidentiality in arbitration.
Moreover, it is clear from the recital that the intention of the new Regulation indeed is to exclude arbitration, and the point of departure in regulating the competence of national courts is not to cripple arbitration proceedings, but to protect the exercise of the powers conferred on the national courts by the Regulation.
EU law has always been destined to form a complete legal order based on a solid construction of fundamental rights or principles and even though it is founded on the principle of conferral from the Member States, it has developed as a ‘supranational legal order’.233 When it comes to judge-made law and different interpretative methods, the question of transparency will probably always remain somewhat unsatisfactory, in the sense that it is almost impossible to attain in a rapidly changing society and social structure.
So where are we heading? Comparing Koulu’s view back in 2007 that an intervention from the EU on arbitration is far away in the future with the development that
233 Arestis 2013, p. 12.
commenced around the same time, it can probably be agreed that the EU arbitration scene, although widely discussed, has remained rather unintervened, and the result of the revision is more or less status quo.234 It has been said that the intensive debate is a result of the increasing popularity of arbitration as an alternative conflict resolution, which has caught commentators’, and also the Commission’s attention.
The situation we dwell in at the moment is unsatisfactory. Although it might be possible to justify the principles in relation to the assumption of jurisdiction under the Regulation, the problem is merely then postponed to the matter of recognition and enforcement of any judgment given. The new Regulation includes an attempt to solve these deficiencies, mainly through recital (12). But, as we have seen, the recital only provides assistance to some extent, and it seems that we stand before a revision that chose status quo instead of presenting any revolutionary renovations to the arbitration exclusion.
We can only attempt to paint a picture of the future concerning arbitration in the EU, but the fact is that we will have to sit tight and wait for proceedings to happen and the Court to issue further rulings on the interpretation of the revised Regulation, and most importantly, whether EU law will become applicable in a particular case, since that is a prerequisite for the Regulation to come into question at all in arbitration proceedings.
234 See Koulu 2007, p. 301.